The Future Of Inequality

A few (3.6) years ago I wrote about the inequality over time induced by the big transitions, such as from primates to foragers to farmers to industry:

Advantages do accrue to early adopters of new growth modes, but these gains seem to have gotten smaller with each new [transition]. … 1. The number of generations per growth doubling time has decreased. … 2. … As we get better at sharing info in other ways, the first insight-holders displace others less. 3. Independent competitors can more easily displace each another than interdependent ones.

Earlier today I wrote about the inequality at each point in time, in the eras between transitions:

The number of species per genera and individuals per families has long declined with size as a tail power of two. After the farming revolution, cities and nations could have correlated internal successes and larger feasible sizes, giving a thicker tail of big items. In the industry era, firms could also get very large. Today, nations, cities, and firms are all distributed with a tail power of one, above threshold scales of (three) million, thousand, and one, thresholds that have been rising with time.

So, the unequal success that comes from some moving sooner in a big transition between growth eras has declined in more recent transitions. Yet the within-era inequality at a moment in time between groups like nations, cities, and firms has increased over time. As larger groups have become feasible, with more internal correlation in their success, the high tails of very large groups has gotten thicker, until they are now Zipf distributed evenly across many size scales. And in such Zipf distributions, typical group size increases with the both minimum efficient scale and total population, both of which have been increasing.

“But that is not all, no that is not all!” (Said the Cat in the Hat.) In the future, the feasibility of much longer lifespans will allow more lifespan variation, which I expect to induce a Zipf power-one tail of individual wealth, up from the current tail power of ~1.4. So individual wealth inequality should increase with this change, and also as population increases.

While a Zipf tail power of one produces more inequality than a tail power of 1.4 or two, yet more inequality comes from a tail power of less than one. And in fact, that sort of inequality is common in our world, among the firms within an industry. For example, this paper estimated power laws for:

The market shares for 506 brands in 48 product categories of foods … [in] a large urban market in the Southwestern US, … [and] for 665 brands in 43 product categories of sporting goods … for the entire United States. … The data are restricted to brands with market shares no smaller than 1%.

Out of the 48 categories with a 5%-significant power estimate, only 17% had powers over one — the other 83% had powers less than one. That is, for most product categories, most market share is held by a few big firms. This isn’t a total winner take all situation, however, as the maximum market share for any firm in this dataset of 1171 brands was 75%. But it is a heavy skewing toward the largest feasible shares.

So if firm size within each product category is distributed with a power of one half, how can the distribution of all firms have a power near one? It must be that the size of product categories is distributed with a power of near one, and firms suffer when they try to handle too many categories at once.

The example of firms within a product category shows that is possible for environments to favor a few large groups, near the maximum feasible size. If some new management trick let firms better manage diverse products, perhaps firms worldwide would merge to a few big firms. And if travel congestion costs that now limit city sizes becomes less relevant, perhaps most everyone would live in a few enormous cities. And that would force everyone to live in a few vast nations, unless a single city could be divided up among several nations.

Even families might become more unequal in the future. Today people with the same surname break up into many small units that mostly succeed or fail on their own. But if those who shared a surname became organized enough to promote a common style and reputation for their members, they might tend more to succeed or fail as a unit.

The future whole brain emulation (em) scenario I’ve been exploring plausibly includes most of these sources of increasing inequality. Em cities should have larger minimum efficient scales, and greatly reduced congestion limits to achieving the many gains of close interaction. And the “clan” of copies of the same original human would make sense as a unit of reputation and governance. For example, I’d expect each occupation to be dominated by a few clans in the same way each product category is now dominated by a few firms.

There might also be substantial advantages to being one of the few hundred “types” that most folks know well. We might return to a forager situation where we prefer to deal with the types we have come to know well over a lifetime of interactions, relative to less known “strangers.”

In sum, I envision an em future with Zipf distributed individual wealth and firm size, where most of trillions or far more of ems come from a few hundred well-known clans, and most live in a handful of cities in a handful of nations. Even so, probably no one individual, clan, firm, city, or nation would hold more than a third of their respective total. In a vast world, even great concentration is consistent with robust competition.